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HDS to acquire Archivas for up to $120M

HDS will acquire archiving software partner Archivas for close to $120 million, stepping up its effort to compete with EMC in this market.

Hitachi Data Systems (HDS) announced that it will acquire Waltham, Mass.-based Archivas Inc. for approximately $120 million, or four times the amount that Archivas received in funding, according to sources close to both companies.

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HDS has been reselling the Archivas Cluster (ArC) software on top of its storage systems since Feb. 2006, to compete against EMC Corp.'s Centera product, HP's Reference Information Storage System (RISS), Network Appliance Inc.'s Nearstore and IBM's DR550. NEC Corporation of America also resell's ArC with its line of modular storage arrays. This relationship will continue, according to Jack Domme, executive vice president, global solutions strategy and development for HDS.

ArC is an object-based storage respository for fixed content that runs in a cluster across standard servers. It stores and retrieves files and metadata as objects rather than files. Users write policies for retention, authentication, data shredding, and protection to meet compliance standards, based on the metadata.

Unlike its competition, ArC is a software only product that supports NFS, CIFS, and HTTP natively, and stores files in standard formats such as XML and HTML, making it a more open environment for users. The key differentiator here is that it is not dependent on hardware and can therefore scale more easily, a crucial factor for a system supporting archival data.

"We are truly the open alternative to EMC," said Gary Voight, CEO of Archivas.

Brad O'Neill, senior analyst and consultant at the Taneja Group, said that ultimately, HDS will be able to use the same Archivas interface on multiple product platforms across generations, utilizing whatever storage formats win out at any given time. "This also creates a huge level of flexibility for HDS when you think about their approach to virtualization. It's a core move," he said.

Several hospitals and research companies are using the product as is NASA's Goddard Space Flight Center in Greenbelt, Md. Goddard is using the software to store atmospheric data retrieved from satellites.

Analysts point out that despite the strength of the product from an engineering standpoint, it has not garnered significant traction in the market. "This is a billion dollar market and we wouldn't count you as a leader here," said Tony Asaro, senior analyst with Enterprise Strategy Group, during a conference call Tuesday.

HDS' Domme acknowledged that, "a great product does not sell by itself." He said HDS will integrate the Archivas sales team into its own field sales organization as well as continue to hire sales people skilled in software solutions. "Virtualization is a tough sale too and that capability has done us wonders as a company," Domme said.

Archivas' investors included North Bridge Venture Partners, Polaris Venture Partners and Solstice Capital.

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